Hobart Continues To Hold Its Own
Hobart remains Australian's strongest performing capital city property market over the past 12 months, with values continuing to edge northward in August.
Some commentators are now predicting that the Hobart market is running out of steam, and has reached its peak.
On the upside, healthy economic conditions in the tourism, tertiary education and building sectors will likely ensure that values and rents hold in the immediate to mid-term.
REIT President, Tony Collidge notes that Hobart is, ""the only market that hasn't had a correction over the past 5-year cycle.
""Hobart's median house price has risen to $496,624, which is an annual growth of 2.8%, while units/ townhouses have risen 8.2% to $379,958 over the same period.""
Moving forward, a notable shortage of stock will likely present as a key issue for the Hobart housing market.
""There is a real shortage of stock across the State, particularly in Hobart and more recently moving into Launceston.
""We have seen a significant decrease in the number of properties for sale which today are at an all-time low.""
Number of Hobart listings in 2017/18
Ripehouse Advisory CEO, Jacob Field reports on this drop in sales volumes, suggesting that generally, this is a signal that a growth cycle is reaching its peak.
""Typically, we like to see a high-sales volume environment to give confidence that capital growth is likely to continue – but according to our research, sales volumes have continued to soften throughout 2018 and into 2019.
""This is usually a cause for concern, a sign that the steam in the current growth cycle is starting to run low.
""We do however observe the underlying demand from both tenants and owner-occupiers demonstrates tremendous strength - the low-sales volumes is more a signal of the fact that residents do not need (or want) to sell, and what is listed for sale is snapped up quickly.""
Contributing to this stock shortage is an explosion of commercial development which is pushing the Tasmanian building industry to capacity.
Mr. Collidge suggests that ""a significantly high level of commercial and retail development has placed a huge strain on the building industry which is struggling to meet the demand for the level of new housing that is required.
""It could take more than a decade to bridge the growing gap of between (3000- 5000 dwellings) of where we are at and where we need to be.""
""This will maintain continuing strong pressure on property prices and rents.""
With Hobart's vacancy rate, the lowest in the country, rental supply remains incredibly tight.
""We have a 0.5% vacancy rate and in July there were just 163 vacant properties available for rent.
""There is strong demand for inner-city apartment living, but unfortunately the local council has adopted a very negative stance towards inner-city growth."" said the REIT President.
On a positive note, strong economic conditions at play in the southern State should help stabilise the market in the near to mid-term future, ensuring that values and rents hold.
""I don't believe there will be a downside to our market given that the major drivers in tourism and tertiary education are still trending upwards, placing increasing demand on rental and visitor accommodation.
""With robust economic conditions, growing employment opportunities there are fewer reasons for the once revolving door of people leaving the State to secure or advance their work opportunities on the mainland to do so.
""Given the current circumstances there is no real economic rationale for property prices or rents to fall in the immediate or mid-term future,"" said Mr. Collidge.